Democratic Views On Social Security

Social security is a tremulous issue. As Americans live longer and longer, the sustainability of social security as a system is being questioned. Democratic views on social security revive around reinstating the system’s sustainability without privatizing or cutting back benefits, stating “Democrats believe that after a life of hard work, you earn a secure retirement. Our commitment to protecting the promise of Social Security is absolute.” Democrats believe that maintaining an income after retirement is the fundamental right of any American that paid into Social Security during their working years. Democrats strongly oppose Republican efforts to privatize social security, believing that this puts people’s retirement income at the mercy of the stock market. In fact, they wish to forbid employers from locking retirement savings into a company’s stock. They also oppose reducing social security benefits for those that are part of other retirement plan options. Democrats do not believe that raising retirement age is a reasonable solution to the problem. They believe that the institution of social security is one that needs protecting, stating, “In 1935, Democrats and President Franklin Roosevelt created Social Security. In 1965, Democrats and President Lyndon Johnson created Medicare. Ever since, Democrats have continually fought to defend these cornerstones of the American Dream in the face of attempts to dismantle or undermine both.”

Democratic Views On Protecting Social Security

One of the greatest concerns the Democratic Party has is how to protect social security so that all Americans who have paid into the system are provided with a “secure, healthy, and dignified retirement.” The increasing life span of the average American has jeopardized this goal, as many people are outliving the money they paid into the system. Democrats have multiple goals on how to resolve this problem and continue social security, stating, “we will ensure that a retirement with dignity is the right and expectation of every single American, starting with pension reform, expanding saving incentives and preventing the privatization of social security.” They would rather see supplements to social security instated than have the system overhauled in a way that they believe is risky. Democrats also believe in protecting retirement benefits beyond social security, and seek solutions for pension plans as well, stating, “Democrats also recognize that Americans rely on more than just Social Security for a secure and dignified retirement. Democrats will continue to fight for genuine pension reform that protects employees’ financial security from future Enron-style abuse. We also want to work on new ways to help hard-working Americans create retirement savings.” In fact, Democrats believe that retirement plans are almost as much of a right as social security in and of itself. They wish to make it easier for Americans to secure additional retirement income, stating, “Democrats are committed to making it easier for Americans to save for retirement on their own. Nearly half the workforce—about 75 million people—currently do not have employer-supported retirement plans. Democrats want to make it easier for all Americans to participate in retirement accounts at work and support a system where employees have pension portability, so workers don’t lose their pension if they change jobs.”

Democratic Views On Privatizing Social Security

Democrats are adamantly against the privatization of social security. They believe that social security should not be subject to the fluctuations of the market, which privatization would cause. Democrats believe that privatization would undermine the social security insurance benefits. The calculations on the rate of return for social security after privatization do not include the insurance protections of the program. This is important because nearly one third of Americans receiving social security benefits are not retired. Instead, they are spouses and children of retired and disabled workers, dependent children of deceased workers, and disabled workers. Privatizing social security would include shifting funds out of the insurance program and into investment accounts assigned to each worker. Whether or not this is beneficial to workers, it would be detrimental to those who are receiving insurance through the social security program.

Democrats also believe that privatization would quicken, not delay, a social security crisis. The program as it is set up now will need a portion of general income tax revenues will to pay interest and eventually principal on bonds that are being purchased now by approximately 2018. At this rate, many predict that the system will once again become pay-as-you-go, which will create a crisis and an under-funding problem, somewhere between 2042 and 2052. The suggestion to divert 2 to 4 percent of payroll to create private accounts could shorten this span. The funds that would bridge the gap between now and 2042 would be diverted. While future generations would have private funds available to them, government would have to start borrowing from the private sector almost immediately to be able to meet commitments to retirees and near-retirees. In order to pave the way for today’s young, Democrats believe the system would be harming today’s retirees.

However, even the benefits to today’s young could be hindered, according to Democratic beliefs. Privatizing social security would hinder economic growth, hurting the futures of those that privatization is supposed to be helping. According to The Century Foundation, “The 2004 Economic Report of the President included an analysis of the fiscal impact over time of the most commonly discussed privatization proposal by the president’s commission. It found that the federal budget deficit would be more than 1 percent of gross domestic product (GDP) higher every year for roughly two decades, with the highest increase being 1.6 percent of GDP in 2022. The national debt levels would be increased by an amount equal to 23.6 percent of GDP in 2036. That means that, thirty-two years from now, the debt burden for every man, woman, and child would be $32,000 higher because of privatization.” This could lead to an increase in interest rates and reduce national savings, further harming retirement prospects for both current and future retirees.

Democrats especially oppose the practice of employers entwining retirement savings with company stocks. They believe this compromises the stability of these savings, and that it is a dishonest practice. They hope to eliminate this practice entirely, stating, “Workers should never lose all their savings because their employer locked those savings into the company’s own stock. We will bar that practice. We need to require honest information and full disclosure, and protect older workers from unfair treatment when their benefits are converted to cash balance plans.”

Democrats vs. Republicans On Social Security

Social Security is one issue that the two parties are almost entirely at odds over. Not only do Republicans and Democrats disagree on the proper way to address the issue of social security, Democrats believe that the way Republicans have handled it in the past is detrimental to the economy and to the retirement system.

One large disagreement between parties on the issue of Social Security is how much of a forefront issue they believe Social Security is. A recent survey by Allianz Life showed that, when asked what they believe the most important economic issues facing America are, 65 percent of Democrats listed Social Security, while only 42 percent of Republicans did. In terms of contributing to the federal debt, more Republicans (38 percent) than Democrats (15 percent) named Social Security. Republicans also show a tendency to start preparing financially for retirement earlier in life than Democrats do. 79 percent of Republicans reported beginning to save before their 50s, with 69 percent of Democrats reporting beginning to save at the same time.

A majority of Republicans believe (56 percent as of 2012, according to a Welles Fargo and Harris survey) that the responsibility for retirement finances rests with the individual. Only 42 percent of Democrats reported the same belief. Most Democrats believed that the government and employers should play a role in retirement funding. In terms of whether or not employers should counsel their employees on managing their retirement savings, far more Democrats (86 percent) say yes than Republicans (only 67 percent). Far more Democrats (77 percent) than Republicans (55 percent) also believe that 401(k) plans should automatically enroll employees. Likewise, 72 percent of Democrats and 56 percent of Republicans believe that 401(k) plans should automatically increase employee’s contributions to their plan by 1 percent each year. The statistics above make it clear that Republicans generally believe in the individual being responsible for their own retirement funding; a cause that is thoroughly aligned with the Party’s proposal to allow independent investment in retirement, outside of Social Security. With these fundamental differences at the base of the issue, it is easy to see where the two parties would easily disagree on the reforms that need to be made.

In terms of reform, a majority of American (56 percent) believe that preventing future cuts to the Social Security program is more important than avoiding increases in Social Security taxes to workers and employers. However, in terms of political parties, 67 percent of Democrats prioritize avoiding benefit cuts, while only 49 percent of Republicans believe this should be the #1 priority in Social Security reform. Within the Republican Party, it has been shown that lower-income Republicans feel that preserving benefits is far more important than higher-income Republicans seem to. Higher-income Republicans tend to believe that it is more important to focus on steps to reduce the budget deficit than it is to preserve entitlements such as social security. Democratic beliefs on Social Security are not divided by income.

In recent budget negotiations, Republicans sought Social Security cuts as a means to reduce government spending. Instead, the President’s proposal includes tax increases to cover the monetary gap. Brendan Buck, a spokesman for House Speaker John Boehner, stated that the President’s refusal to seek these cuts a reaffirmation of “what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis. The one and only idea the president has to offer is even more job-destroying tax hikes, and that non-starter won’t do anything to save the entitlement programs that are critical to so many Americans. With three years left in office, it seems the president is already throwing in the towel.”

Many in support of the President’s budget proposed seeking cuts in the medical care sector instead, as medical spending has now exceeded Social Security as a cost to the government. This is a tactic that has been used by Republicans in budget cuts in the past. In both the 2012 and 2013 budget proposals, both heavily drafted by Republican Paul Ryan, Social Security was left untouched. Instead, Ryan proposed heavy reforms to both Medicare and Medicaid.

Democrats are just as outraged at Republican initiatives as Republicans are at theirs, stating “During their working years, Americans contribute to Social Security in exchange for a promise that they will receive an income in retirement. Unlike those in the other party, we will find a solution to protect Social Security for future generations. We will block Republican efforts to subject Americans’ guaranteed retirement income to the whims of the stock market through privatization. We reject approaches that insist that cutting benefits is the only answer. President Obama will also make it easier for Americans to save on their own for retirement and prepare for unforeseen expenses by participating in retirement accounts at work.” They see Republican efforts as a fight to undermine retirement stability. They believe that Republican-suggested overhauls of the social security system are actually meant to destroy the system, and also that the problems that exist within social security exist because of Republican financial irresponsibility, stating, “Democrats believe that Social Security and Medicare must be kept strong for seniors, people with disabilities, and future generations. Our opponents have shown a shocking willingness to gut these programs to pay for tax cuts for the wealthiest, and we fundamentally reject that approach.

Because the massive deficits under the Bush Administration have raided hundreds of billions of dollars from Social Security, the most important step we can take to strengthen Social Security is to restore fiscal responsibility.”

Hillary Clinton On Social Security

Much like the rest of her party, Hillary Clinton opposes cutting social security benefits on any level. She also opposes increasing taxes to create a larger fund for the future. Instead, she supports a pay as you go system much like that which was created by Reagan in 1983. In a 2008 debate, Clinton stated “I am totally committed to making sure Social Security is solvent. You’ve got to begin to reign in the budget, pay as you go, to try to replenish our Social Security Trust Fund. And with all due respect, the last time we had a crisis in Social Security was 1983. Pres. Reagan and Speaker Tip O’Neill came up with a commission. That was the best and smartest way, because you’ve got to get Republicans and Democrats together. That’s what I will do. And I will say, #1, don’t cut benefits on current beneficiaries they’re already having a hard enough time. And #2, do not impose additional tax burdens on middle-class families.” However, Obama pointed out that the system that Reagan instituted raised the retirement age and raised the payroll tax, which are both elements that Clinton has opposed. She also opposes raising social security taxes on the upper class. When Obama proposed to raise Social Security taxes on annual earnings over $97,500, Clinton spoke out against the plan, calling it “a trillion-dollar increase on middle class families.” There was much controversy regarding this statement and what it says about Clinton’s perception of class lines. She defended her statement by saying, “I represent firefighters. I represent school supervisors.”

Barack Obama On Social Security

Barack Obama discusses social security in his 2011 State Of The Union address, stating “To put us on solid ground, we should also find a bipartisan solution to strengthen Social Security for future generations. We must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.” President Obama has worked to reconstruct the social security system. He created the Recovery Act, which provided a one-time payment of $250 to retirees, other Social Security beneficiaries, disabled veterans, and SSI recipients during the recent economic crisis. Obama has also called for Congress to enact another $250 Economic Recovery Payment this year for seniors, veterans, and people with disabilities. Like his party, Obama is thoroughly opposed to reducing social security benefits in any terms, believing that “a reliable source of income for American seniors and as a program that provides robust benefits to survivors and workers who develop disabilities. He believes that no current beneficiaries should see their basic benefits reduced and he will not accept an approach that slashes benefits for future generations.” Obama is committed to strengthening outside retirement systems as much as social security, including supporting automatic enrollment in 401(k) plans and IRA plans.

Elizabeth Warren On Social Security

Elizabeth Warren is also strictly against cutting back social security. What is unique about her views is that she seeks to not only strengthen social security, but also to expand it. She seeks to implement new systems to recalculate social security, stating The Bureau of Labor Statistics has developed a measure of the impact of inflation on seniors. It’s called the CPI-E, and, if we adopted it today, it would generally increase benefits for our retirees — not cut them.” Warren believes that we need to build the economy in order to fix anything. Social security should not be the focus as much as the economy. However, Warren believes that the economy will be harmed by dismantling social security, so that should be a non-existent option. Those that are being harmed most by the economic crisis, Warren explains, need the system the most. In a Senate speech on the issue, Warren stated, “Social Security isn’t the answer to all of our retirement problems. We need to find ways to tackle the financial squeeze that is crushing our families. We need to help families start saving again. We need to make sure that more workers have access to better pensions. But in the meantime – so long as these problems continue to exist and so long as we are in the midst of a real and growing retirement crisis – a crisis that is shaking the foundations of what was once a vibrant and secure middle class – the absolute last thing we should be doing is talking about cutting back on Social Security.” She believes that increasing social security issues will improve the economy overall, and therefore lessen the crisis bearing down on social security. Warren’s views on social security have led many to see her as a champion of the issue and to support her as a candidate in the 2016 election. Democrats see Warren’s views and her vocalization of them as a way to “demonstrate the popularity of her anti-austerity, pro-financial reform message in the hopes that other Democratic politicians will begin to emulate it.” Her views stand in staunch contrast to Hillary Clinton’s, and the urgent nature of the social security issue to today’s youth makes this an issue that could cause Warren to hold her own against the Democratic favorite.